1. What happens to Gainesboros financing need and unused debt capacity if:

1. no dividends are paid?
2. a 20% payout is pursued?
3. a 40% payout is pursued?
4. a residual payout policy is pursued?

Note that case Exhibit 8 presents an estimate of the amount of borrowing needed. Assume that maximum debt capacity is, as a matter of policy, 40% of the book value of equity.